The good news for the housing sector is that existing home sales in the U.S. rose 10.1% in October, 2009, and we are beginning to see signs of stabilization. [See Policy, Price, and Product Are Used to Assess Market Recovery for details.]
There is widespread agreement that problems in the housing market caused the financial crisis and led to the recession. It’s important to note, however, that the housing market is inextricably linked to the employment sector and a sustained improvement for housing might not be realized until the broader economy, including the job market, has recovered.
Demand for housing is driven by demographics—the number of new households being created—and the jobs picture. The job picture, in particular, is crucial for residential real estate since employment allows homeowners to keep their mortgage current and avoid foreclosure.
Therefore, if you’re anxious to predict the value of your home one or two years from now, it’s worthwhile to consider the status of the labor market and the progress being made in the area of jobs creation. Remember too, that real estate conditions vary greatly by region, so keep your eye on the local job market as well as what’s happening on a national level.
